US Senate makes history, advances stablecoin bill to floor vote
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Stablecoin legislation is heading to the United States Senate floor for the first time, despite some senators' concerns that the bill they just advanced contains significant legal loopholes.
Late on May 19, the U.S. Senate voted 66-32 to invoke cloture on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which aims to regulate so-called 'payment stablecoins.' The vote marks a historic step that will for the first time send stablecoin legislation to the Senate floor for a final vote.
The move to invoke cloture required 60 'aye' votes, a hurdle that GENIUS failed to clear in a similar vote on May 8. That vote saw GENIUS receive 49 'aye' votes, only one more than those opposed. The ranks of those opposed included Senate majority leader John Thune (R-SD), who later said he voted 'nay' in order to revisit the process following further cross-party haggling.
Following that setback, the two parties haggled behind closed doors most of last week to craft a version of GENIUS that could garner the 60 votes needed to move forward. While the resulting tweaks garnered the approval of some key Dems who previously voted 'nay,' those who remained opposed viewed these revisions as largely cosmetic, seemingly intended to give naysayers cover for switching their votes this time.
It didn't hurt that the pro-crypto lobby group Stand With Crypto (SWC), funded by the Coinbase (NASDAQ: COIN) exchange, issued a not-so-veiled threat on Monday morning, tweeting that 'SWC will be scoring this vote as a KEY VOTE.' This means how senators vote on GENIUS would impact their SWC' scorecard,' aka the designation that determines whether they're pro- or anti-crypto (with potentially serious repercussions for those in the latter camp come the 2026 midterm elections).
As Crypto in America reporter Eleanor Terrett noted following Monday's vote, 'all the candidates that [pro-crypto political action committee] Fairshake supported in the election' voted 'aye' on Monday.
Earlier Monday, Politico reported that the plan was to vote to advance the revised version of GENIUS, allowing some opportunity for further debate on the Senate floor. But since the coming floor vote requires only a simple majority—which the GOP already has—the Dems who flipped their votes from last time have effectively surrendered their bargaining power before the bargain has been sealed.
At any rate, GENIUS supporters in the Senate don't plan to wait long for a floor vote, which could come as early as Tuesday but will almost certainly come before the Memorial Day holiday (May 26). Assuming the floor vote tracks a similarly friendly path, the bill would then head to the House of Representatives, which has its own stablecoin bill (STABLE) in the works.
What's new
One of the main sticking points from the original GENIUS was its thumbs-up for Big Tech firms to issue their own stablecoins. A summary of changes in the revised GENIUS shows the dealmakers papered over this crack by requiring 'non-financial publicly traded companies' to receive approval from a new Stablecoin Certification Review Committee (SCRC)—comprised of the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC)—that would be tasked with ensuring a Big Tech stable didn't pose a 'material risk' to the banking system.
However, given (a) the current administration's wholesale embrace of all things crypto, (b) the degree to which Big Tech firms have ingratiated themselves with the administration, and (c) the abandonment of nearly all crypto enforcement by regulatory agencies, it's hard to believe that this Committee would prove anything more than a low-level speedbump for would-be stable issuers.
Big Tech stable-issuers would be prohibited from using their customers' stablecoin transaction data to target said customers for other promotions and from selling this data to third parties. However, these prohibitions would be rendered moot if customers click 'okay' to an updated Terms of Service notification, which, as we all know, few customers will actually read. So again, it's not much of a guardrail.
There also doesn't appear to be any prohibition on private tech firms issuing their own stablecoins. In a Senate Banking Committee Democratic Staff Analysis of the revised GENIUS, Elon Musk's X (formerly Twitter) is singled out as an example of a private company not predominantly involved in financial activities that could take advantage of this loophole.
As for 'foreign' stable issuers like Tether (USDT), GENIUS previously allowed them more or less free reign to operate in the U.S. provided they could claim registration in a country deemed to have 'comparable' rules as America. The revised GENIUS would require the SCRC to approve this 'comparable' designation rather than leaving it up to the sole discretion of Treasury Secretary (and crypto fan) Scott Bessent. Foreign issuers also couldn't be based in a country under U.S. economic sanctions or a jurisdiction deemed to be of 'primary money laundering concern.' And while foreign-issued stablecoins would be barred from trading on centralized exchanges (CEXs), no such prohibition applies to decentralized exchanges (DEXs).
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Dems split on how to handle Trump's digital asset ventures
Last week, Sen. Elizabeth Warren (D-MA) issued her own critique of the revised GENIUS that largely focused on the lack of constraints put on the crypto activities of President Donald Trump and his family. These include the USD1 stablecoin issued by the Trump-controlled decentralized finance (DeFi) project World Liberty Financial (WLF).
Warren claimed the GENIUS loopholes will allow Trump to 'functionally regulate his own stablecoin,' given his previous executive order asserting 'direct control over independent financial regulators.'
On May 19, Warren reiterated her objections on the Senate floor, saying the revised GENIUS's 'basic flaws remain unaddressed.' Warren said she'd welcome a bill that strengthened stablecoin oversight, but a bill that 'turbocharges the stablecoin market, while facilitating the President's corruption and undermining national security, financial stability, and consumer protection is worse than no bill at all.'
Warren's colleague Mark Warner (D-VA) voted 'aye' on Monday, releasing a pre-vote statement calling the revised GENIUS 'not perfect, but it's far better than the status quo.' Warner added that 'blockchain technology is here to stay. If American lawmakers don't shape it, others will—and not in ways that serve our interests or democratic values.'
However, Warner acknowledged his 'very real concerns about the Trump family's use of crypto technologies to evade oversight, hide shady financial dealings, and personally profit at the expense of everyday Americans.' Warner added that senators have 'a duty to shine a light on these abuses and stop Donald Trump from exploiting emerging technologies to enrich himself, dodge accountability, and weaken the safeguards that protect American consumers and the rule of law.'
Ahead of Monday's vote, Sen. Michael Bennett (D-CO) introduced a bill to impose the kind of restrictions on Trump's crypto ventures that GENIUS lacks. Cheekily titled the Stop Trading Assets Benefiting Lawmakers' Earnings while Governing Exotic and Novel Investments for the United States (STABLE GENIUS) Act, the bill would prohibit 'elected officials and federal candidates from issuing or endorsing digital assets while also preventing officials from making legislative or policy decisions influenced by the digital assets they hold.' It stands precisely zero chance of passage, so let that be the last we hear of it.
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Justin Sun, founder of the TRON blockchain, recently began tweeting clips of himself visiting U.S. landmarks, strongly suggesting that he will be in attendance at Thursday's dinner for the top 220 holders of President Trump's $TRUMP memecoin. The controversial contest to obtain an invite to the 'gala' dinner at the Trump National Golf Club closed last week, with the top wallet identified only by the name 'Sun.'
Technically, the 'Sun' wallet is associated with the Seychelles-based HTX (formerly Huobi) exchange, which has long been rumored to be under Sun's control (although Sun denies this). Sun is also a WLF adviser, an appointment he secured after spending $75 million to buy WLF's governance token WLFI.
The media won't be welcome at Thursday's gala dinner, so we'll have to wait for attendees (or perhaps the president himself) to dish the dirt on who attended and what they talked about.
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Sen. Blumenthal slams WLF inquiry response
Returning to WLF a moment, earlier this month, Sen. Richard Blumenthal (D-CT), the ranking member of the Senate Permanent Subcommittee on Investigations, opened a preliminary inquiry into $TRUMP, WLF, and the president's 'other associated business ventures.'
Blumenthal said he was 'seeking answers' from WLF co-founder Zach Witkoff 'about how the President may be violating the law and using the immense power of the federal government to enrich the company, its foreign business partners, and others in the cryptocurrency industry.'
On May 15, Zach Witkoff tweeted a copy of a letter his attorneys had sent in response. Witkoff's letter claimed Blumenthal's letter to Witkoff contained 'inaccuracies and fundamentally flawed inferences,' while also claiming that WLF has 'no affiliation, formal or informal' with the entities responsible for issuing $TRUMP.
While declining to address many of Blumenthal's queries, the defiant letter said WLF 'rejects the false choice between innovation and oversight' and 'opposes' the 'misuse of regulatory authority and uncertainty to suppress lawful innovation.'
Blumenthal told The Block that he found Witkoff's response 'seriously inadequate' and said WLF's 'refusal to answer even the most basic questions about President Trump's financial entanglements with the company raises serious concerns, and I will continue demanding transparency for the American people.'
Demanding ain't getting. Just sayin'.
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